Figuring Out Basware in the P2P and Trade Financing Equation

Basware doesn’t enjoy sitting still. When I first dove into the provider in the early days of Spend Matters, it was deeply rooted in the enterprise software business with arguably the strongest accounts payable automation capability, as well as e-invoicing, limited e-procurement and even core financials, which is where it began serving the needs of Nordic companies.

In many ways, Basware was the accounts payable-centric equivalent of Ariba, and like Ariba, it dabbled in the other side of purchase to pay (P2P) – but in this case the other end of it. Both companies set out to move into the cloud, but unlike Ariba, Basware’s Alusta platform represented a completely new architecture and code-base, whereas Ariba P2P was a port of Ariba Buyer into the cloud.

At the same time, Basware also set out to expand its supplier network offering, and in doing so, arguably became the largest e-invoicing network in Europe for basic connectivity and value-added tax (VAT) compliance. (Although there are many ways to definitionally debate that statement!) Alusta has proved an interesting experiment for Basware, arguably not quite as successful initially as Ariba’s more conservative move to the cloud, which has in large part been helped by SAP’s reach, but appears to be making greater strides in recent quarters as the product set has matured.

But the big question is whether Basware’s P2P, e-invoicing and supplier network capability is just a Trojan horse for a new business model built on financing. As my colleague David Gustin has noted, in 2014, Basware announced a “suite of supply chain finance capabilities that are both buyer and seller driven.”

As David observes, “one [offering] is called Basware Factor and they are partnering with Arrowgrass Capital Partners, a $5 billion London hedge fund, to develop an electronic invoicing service in the latest move to capture business credit that has stayed on corporates balance sheets in the form of payment terms.”

The Basware Factor product is different from most peers. As David notes, “What makes this financial product so interesting is that it is true factoring, which works with sellers and does not require a buyer approved invoice unlike many of the other models that offer early pay, dynamic discounting, or reverse auction solutions. Factoring allows businesses to sell their unpaid invoices at a discount in order to meet cash flow needs.”

Of course Basware is also going the discounting route for those that want to head down that path as well – and is also partnering with Mastercard on payment and other programs.

Basware could be a spoiler in the trade financing equation among technology companies. Trade Financing Matters looks forward to exploring the uptake of the programs in the second half of 2015 and as the programs begin to scale in 2016 and beyond.